Rendering of Pawtucket soccer stadium ends up revealing USL scheme to exploit Trump opportunity zones for federal tax breaks

Journalism takes all forms in these days of vanishing budgets and vanishing newsrooms, and sometimes it’s somebody spotting something on a website and going whuh?

That is, as the Valley Breeze notes, an image of a new soccer stadium and accompanying development on the Seekonk River in downtown Pawtucket. True, as the paper notes, this version of Pawtucket is “missing some downtown features and shows mountains in the background,” but clearly somebody at least went through the trouble of Photoshopping a soccer stadium onto some alternate-reality Pawtucket, which has to mean something.

And the Valley Breeze reporting staff (actually Valley Breeze managing editor Ethan Shorey, who in the absence of a masthead I’m guessing is the entire Valley Breeze reporting staff) went to the trouble of calling developers Fortuitous Partners and asking about the picture, and got confirmation that they’re “pursuing a $400 million project” in Pawtucket. Fortuitous — whose founder Brett Johnson also owns the Phoenix Rising F.C. USL team — was previously reported to be interested in building a USL soccer stadium on the site previously rejected by the Pawtucket Red Sox for a new baseball stadium. And Johnson had more to say about the project:

He described United Soccer as the fastest-growing sports league in the world, saying the company is exploring more than 60 markets that all have the potential to bring soccer, and leveraging the opportunity zones in every case.

Now that’s some news. Not the “exploring more than 60 markets” part — that doesn’t mean we’ll actually get 60 USL teams, though we’re already getting close. No, the interesting bit is that USL apparently plans to pick its stadium sites by locating teams in “opportunity zones,” the new Trump-created districts that allow developers to defer or evade entirely paying capital gains taxes on projected in “undercapitalized” areas.

As Billionaire Boondoggle author Pat Garofalo has reported, 52 existing major-league stadiums and arenas are already in opportunity zones. But because the main benefit to an opportunity zone is placing assets in an “opportunity fund” and then letting them gain in value tax-free — the language is hideously complex and even the forms are incredibly confusing, but that’s the best I’ve been able to figure out based on reading up on OZs and talking to tax experts — it seems like it would hold special appeal to investors looking to create a whole new entity, say a USL team, and then holding it within an opportunity fund so that the inevitable gains when USL teams turn out to be worth hundreds of millions of dollars despite everybody and their sister having one would be tax-free.

If you’re hoping for a dollar figure or even a guesstimate on how much this would cost the federal treasury, we are way too early in the game for that, sorry. But it is an indicator of how obscure changes in tax policy can shift an entire industry’s approach to its business model; sort of the way the 1986 Tax Reform Act’s okaying of using tax-exempt bonds for sports facilities helped spark the torrent of new publicly funded sports venues that followed. Capitalist free markets obey rules, yes, but those rules are set down by government policy, and tweaking one or two can make a huge difference in who gets to earn money how — which is no doubt why billionaires stayed up all night phoning Congressional legislators to get OZs passed into law.

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9 comments on “Rendering of Pawtucket soccer stadium ends up revealing USL scheme to exploit Trump opportunity zones for federal tax breaks

  1. Wow. The rendering is laughably amateurish. Full stadium, grandstands packed and players on the field. Half empty parking lot. It could be Pawtucket or it could be anywhere. The townhouses on the right and the soccer stadium on the left are at very different scales. The stadium is for Hobbits. Hobbits don’t drive, I guess.
    They must have bulldozed Slater Mill because I don’t see it anywhere. It should be right there on the river. It’s a National Park and an extremely important historical site and the only thing that reliably draws visitors to downtown Pawtucket . At least until USL Soccer came along and gave us all something to live for.

    1. We all remember the brave “Rendered Mountain Boys” regiment from Rhode Island in the Revolutionary War. And all those great “Rendered Mountains of Rhode Island” folk songs.

    2. Hey, if someone is going to spend $400m in taxpayer funds to install mountains in your district, you can’t complain about a few historic sites being bulldozed to make it happen…

  2. 400 million dollars for a new stadium so Pawtucket can have a USL team??? That’s a lot of money for a franchise in what could charitably be called a AAA league.

      1. That is a very kind assessment.

        — Germany
        Bundesliga average attendance; 43,449 (1)
        2 Bundesliga average attendance; 20,552 (9)
        3 Bundesliga average attendance;
        — England
        Premier League average attendance; 38,168 (2)
        Championship League average attendance; 18,608 (11)
        League One average attendance; 8,741
        League Two average attendance;
        — Spain
        La Liga average attendance; 26,814 (3)
        Segunda average attendance; 9,750
        — Mexico
        Liga MX average attendance; 25,582 (4)
        Ascenso MX average attendance; 5,627
        — Italy
        Serie A average attendance; 25,237 (5)
        Serie B average attendance; 7,506
        — China
        Super League average attendance; 24,107 (6)
        — France
        Ligue 1 average attendance; 22,799 (7)
        Ligue 2 average attendance; 6,784
        — Japan
        J1 League average attendance; 19,079 (10)
        J2 League average attendance; 7,048
        — Netherlands
        Everdivisie average attendance; 17,974 (12)

        — USA
        MLS average attendance; 21,000 (8)
        USL Championship League average attendance; 4,478

        1. @Tim: Well done.

          MLS likes to brand itself as “between” the PL and championship. Given the range of quality that exists in the bottom end of the PL and the Championship as a whole, that’s a wide target to hit.

          Is MLS better than the relegation threatened clubs (on average) in the Championship? The best MLS clubs are. Is it comparable with the LC clubs fighting for promotion? No.

          As for USL, yeah, it’s well down the list. It’s hard to compare to baseball, but in terms of the gulf between the USL and the best European leagues… it’s probably more like A ball or maybe the better independent leagues.

          Yet Boise is preparing to spend $50m to try and “lure” a USL franchise (expansion fee $5m, probably negotiable) there… Oy.

    1. That stadium looks roughly $30-70 million in my opinion, based on recent projects. The rest would be whatever is on the other side of the river, the Apex site (other side of I-95) and whatever they put on the McCoy Stadium land.

  3. This adds to my longstanding suspicion that soccer in the US is frequently a means to 1) get access to land at below market value and 2) avoid taxation on gains accruing from developing said land.

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